German labour agency faces over 8 billion euro deficit in 2026, report says

BERLIN, June 2 (Reuters) - Germany's Federal Employment Agency (BA) faces a deficit of more than €8 billion euros ($9.3 billion) this year, more than twice the shortfall previously planned, according to a BA report for the federal parliament's budget committee seen by Reuters on Tuesday.

The agency had assumed a deficit of just under 4 billion euros in its 2026 budget planning but a weaker labour market and downgraded economic outlook mean the gap is now expected to widen sharply, the report said.

If the contribution rate for unemployment insurance remains unchanged, the labour agency would have to cover the shortfall through a government's loan.

The budget committee is due to discuss the agency's financial outlook next week.

OUTLOOK UNTIL 2030 CLOUDS OVER

The labour agency also expects deficits in the coming years, with accumulated debt potentially rising to around 23 billion euros by 2030.

The agency projects a deficit of 2.7 billion euros in 2030, based on the government's spring forecast, which assumes a significantly weaker economy and labour market than previously expected.

While the government's autumn projection had forecast unemployment falling to 2.742 million by 2030, the current estimate is 2.828 million.

($1 = 0.8591 euros)

(Reporting by Holger Hansen, writing by Maria Martinez)